Councillors take aim at city pensions

[Locke]

Look at US cities that have gone bankrupt and what their primary obligation that sent them over the brink was.

Its public pensions.

They are an unsustainable Ponzi Scheme.

[iggy_oi]

Originally Posted by Locke

Look at US cities that have gone bankrupt and what their primary obligation that sent them over the brink was.

Its public pensions.

They are an unsustainable Ponzi Scheme.

Lack of tax revenue from decades of tax cuts despite being well aware of their pension obligations probably didn’t help either

[Ozy_Flame]

I think pension benefits should be rolled back at the City, but should be grandfathered in. High pension earners should roll out through natural attrition. I used to work in City government, and with the economy the way it is and the high demand for public sector positions, as well as the long-term sustainability of the program, I think it is time to tighten it up as well.

[CliffFletcher]

Originally Posted by GGG

Isn’t this just an actuarial problem. Pick inflation, rate or return and lifespan conservatively and there shouldn’t be issues.

In some cases it's the people in charge of these plans who are ringing the alarm bell. The manager of the Ontario Teachers Pension Fund has commented that a system where teachers collect pensions for longer than they've worked is unsustainable. Something has to give.

At the federal level, Harper took a long-overdo measure and increased the pension age to 67. But along comes Trudeau looking for votes and he rolls it back to 65 again. That's just delayed the pain.

[Slava]

Originally Posted by iggy_oi

Lack of tax revenue from decades of tax cuts despite being well aware of their pension obligations probably didn’t help either

It's not helpful, for sure, but I don't know how much appetite you'll find for people to pay increased taxes in order to ensure that we meet these pension obligations either. People generally aren't super excited to pay more taxes to receive increased services, let alone paying more to make sure that people have good retirements.

[The Yen Man]

I just think it's crazy a city worker can retire when they're 55. With how much longer we're living, that person can potentially be on pension for another 30+ years. That's more than their total time worked. How can that possibly be sustainable?

[crazy_eoj]

Originally Posted by NuclearFart

Speaking with friends who work at the city, that pension is one of the few perks that actually attracts quality talent to the low salary, no bonus/stock options, typical of municipal job remuneration. Take that away, and there will be an outflow of skill back into the private sector.

It would be nice to see attrition rates close to what is experienced in the private sector.

I think there's a lot of other perks that attracts municipal employees that would remain in place outside of the gold plated pensions. It's understandable that your friends would want to keep their benefits as is, but unfortunately they are quite simply affordable.

[Ozy_Flame]

Originally Posted by The Yen Man

I just think it's crazy a city worker can retire when they're 55. With how much longer we're living, that person can potentially be on pension for another 30+ years. That's more than their total time worked. How can that possibly be sustainable?

Is it crazy? There are high earners in all sectors and industries. These people could just as easily be planning for "Freedom 55" as public sector employees could.

[crazy_eoj]

Originally Posted by Ozy_Flame

Is it crazy? There are high earners in all sectors and industries. These people could just as easily be planning for "Freedom 55" as public sector employees could.

What I see is that ALL city employees qualify for their pension at 55. That's not high earners.

Average retirement age for Canadians is now well over 65.

Figure it out. C R A Z Y .

[Ozy_Flame]

Originally Posted by crazy_eoj

What I see is that ALL city employees qualify for their pension at 55. That's not high earners.

Average retirement age for Canadians is now well over 65.

Figure it out. C R A Z Y .

So perhaps then we stretch out their employment to 65 and then earn the same amount of money? What would be the benefit of that?

[The Yen Man]

Originally Posted by crazy_eoj

What I see is that ALL city employees qualify for their pension at 55. That's not high earners.

Average retirement age for Canadians is now well over 65.

Figure it out. C R A Z Y .

This. I'm not talking about high earners. I'm talking about a normal employee like an AP admin or a data entry clerk.

If anything, with how long we're living, retirement age should be at 70 rather than 65. A guy retiring at 55 would be retired 15 years earlier than most people in the private sector. To me, that just seems nuts.

[The Yen Man]

Originally Posted by Ozy_Flame

So perhaps then we stretch out their employment to 65 and then earn the same amount of money? What would be the benefit of that?

Well, for one, they're earning that money for 10 more years by working rather than it being paid out by the pension fund.

[Ozy_Flame]

Originally Posted by The Yen Man

Well, for one, they're earning that money for 10 more years by working rather than it being paid out by the pension fund.

So you want these employees to work 10-15 more years earning taxpayer dollars, and use their pensions (same amount of money, if not more due to interest accumulation) for a shorter period of time? I guess I just see negatives in that scenario. Less employment for young people, more total cost to the taxpayer, and relying on workers to be physically and mentally able to deliver for a significant amount more time.

I get the retirement age at 65 because things have changed, I just don't see the benefit in drawing it out further just because. If the same person is going to earn the same amount of money (if not more) at 65 rather than 55, there is no obvious financial benefit.

[The Yen Man]

But they're still paying part of their earned salary into the pension while they work that additional 10 years, and then drawing it out later. So the pension fund gets funded better, and gets less drawn out.

I don't really understand the argument of how there's no financial benefit. The benefit is people using less of that fund that isn't going to be sustainable because it's paying out more than it's taking in.

[Fuzz]

Originally Posted by Ozy_Flame

So you want these employees to work 10-15 more years earning taxpayer dollars, and use their pensions (same amount of money, if not more due to interest accumulation) for a shorter period of time? I guess I just see negatives in that scenario. Less employment for young people, more total cost to the taxpayer, and relying on workers to be physically and mentally able to deliver for a significant amount more time.

I get the retirement age at 65 because things have changed, I just don't see the benefit in drawing it out further just because. If the same person is going to earn the same amount of money (if not more) at 65 rather than 55, there is no obvious financial benefit.

Hey, why not make it 45 if there is no benefit to working longer, right?


If you have an employee retiring at 55 you have to replace them. But then you have to pay a pension for that working for 10 extra years, and pay a new employee. Then the new employee retires 10 years later, so you lose 10 years of work but still have to pay pensions. I'm sure you could run the math on various scenarios, but I don't see any where you pay a pension and it still makes financial sense to have them retire earlier.

[Fuzz]

Originally Posted by The Yen Man

But they're still paying part of their earned salary into the pension while they work that additional 10 years, and then drawing it out later. So the pension fund gets funded better, and gets less drawn out.

I don't really understand the argument of how there's no financial benefit. The benefit is people using less of that fund that isn't going to be sustainable because it's paying out more than it's taking in.

The argument only makes sense financially if you are the one getting the pension.

[Ozy_Flame]

Happy to be proven wrong if someone can show the numbers with empirical data.

Seems to me that a person that has to work 10 more years is earning a maximum salary, and even assuming their pension contribution get knocked down to be spread over another decade. Wouldn't that extra 10 years of work be better spent to a lower-salaried employee with less contributions and creating more turnover in the sector? Lower salaried-employees with less pension are more likely to change careers these days than in yester-years, so your draw on pension funding is likely to be less anyways. It's rare for millenials to be a "one job, one career" situation in modern employment models.

[iggy_oi]

Originally Posted by Slava

It's not helpful, for sure, but I don't know how much appetite you'll find for people to pay increased taxes in order to ensure that we meet these pension obligations either. People generally aren't super excited to pay more taxes to receive increased services, let alone paying more to make sure that people have good retirements.

I wasn’t trying to make an argument for raising taxes to pay for it, I was just pointing out that reducing taxes when it doesn’t leave you enough revenue to cover your existing liabilities is a bit of a fools errand.

[CPK80]

Originally Posted by The Yen Man

I just think it's crazy a city worker can retire when they're 55. With how much longer we're living, that person can potentially be on pension for another 30+ years. That's more than their total time worked. How can that possibly be sustainable?

It is more complex then that... There is also a 85 factor included in that requirement... So to retire at age 55 you also need 30 years service, so that means you would have been working with the City age 25 or younger.

(You can retire before an 85 factor, but your pension is greatly reduced).

[crazy_eoj]

Originally Posted by Ozy_Flame

Happy to be proven wrong if someone can show the numbers with empirical data.

Seems to me that a person that has to work 10 more years is earning a maximum salary, and even assuming their pension contribution get knocked down to be spread over another decade. Wouldn't that extra 10 years of work be better spent to a lower-salaried employee with less contributions and creating more turnover in the sector? Lower salaried-employees with less pension are more likely to change careers these days than in yester-years, so your draw on pension funding is likely to be less anyways. It's rare for millenials to be a "one job, one career" situation in modern employment models.

Why don't you prove your case instead of putting the burden on others? Your proposition doesn't make any sense.

Don't you claim to own and operate a business?